Chip Dumping

Intentionally losing chips to another player for the purposes of cheating. This subterfuge is not permitted online and is ethically questionable.

People Who Don't Understand Chip Dumping

Nobody. Anyone who claims they did not know they were chip dumping or that chip dumping is against the rules of online poker rooms is lying.

Why Do People Chip Dump?

The most common historical reason for chip dumping is to aid a friend or associate at the poker table by giving him more chips. It is typically perpetrated in tournaments so that the aided player will have a better chance to win.

In the age of internet poker, chip dumping has become a way for players to launder funds at cash tables, which is the big reason why it is a bannable offense at most sites.

How Do People Chip Dump?

The online poker scam most often goes down in one of two ways:

a) The crook will deposit funds with a stolen credit card and then dump the chips at a cash table, often heads-up, to an accomplice or another account he created. The owner of the account that was dumped to then cashes out.
b) The crook will hijack an innocent player's account, buy-in at a cash table, and dump the chips to an accomplice, who then cashes out.

The actual mechanics of dumping are quite simple. Players will either make stupidly large bets with terrible hands, expecting to lose to the accomplice, or make large bets/raises, only to fold on a later street to a tiny bet (a bet which any legit player would quickly call).

The online poker rooms are keenly aware of this scam and are very good at sniffing out perpetrators before their cashouts are approved.